- | P a g e
pg. 1
CMCA EXAM 2 NEWEST 2025 ACTUAL EXAM|
COMPLETE 200 QUESTIONS AND CORRECT
DETAILED ANSWERS (VERIFIE D ANSWERS)
ALREADY GRADED A+| CMCA EXAM REVIEW
2025| BRAND NEW!!
Typical sources of revenue for a community association include: -
ANSWER - Owner assessments, Interest, and Other revenue (late payment fees, fines, user fees - parking space rentals/swimming pool use).
Assessment - ANSWER - Owner's financial obligation to the community association during a given period of time - usually one year. It covers the owner's share of the common expense.
How often to pay assessments? - ANSWER - Monthly, quarterly or annual basis depending on what the governing documents dictate.
Special Assessment - ANSWER - Is a onetime assessment often voted on by the owners to cover a major expense that was not included in the annual budget or replacement reserve.
Interest - ANSWER - A typical source of revenue for communities is interest or dividends earned on their cash savings and investments.
- / 4
- | P a g e
pg. 2 Expenses - ANSWER - Consist of the goods and services used to operate and maintain the association's common elements.
What are the three types of expenses for community associations? - ANSWER - Operating expenses, major improvement expenses, and reserve account.
Calculating Assessments for Condos - ANSWER - Total Assessments Required in Annual Budget x Percentage Interest as Found in the Declaration / Number of Installment Payments in a Year
When should a community budget be approved? - ANSWER - At least 45 days in advance of the start of the fiscal or budget year.
What should a budget packet include? - ANSWER - Operating budget, a summary of the reserve budget, and a 3-5 year cash flow report combining the operating and reserve budgets.
Mandatory Line Items - ANSWER - Items based on a community and owner needs. They are requirements that the community is obligated to meet, e.g. income taxes, management fees, repairs, utilities, and maintenance.
Discretionary Line Items - ANSWER - Items based on owner, board, and committee desires. They are items people would like to have - given their values, lifestyle, and preferred level of service, e.g. social and recreational expenses, picnic area, etc. 2 / 4
- | P a g e
pg. 3 Chart of Accounts - ANSWER - Organized list of the titles, descriptions, and assigned number of all accounts in an organizational's general ledger.
Zero-base budgeting - ANSWER - With this method, all line items are set to zero and the amount of funds allotted to each must be justified.
Historical trend budgeting - ANSWER - This method begins with the assumption that existing line items are needed. The amount of funds allotted to each during the current year is adjusted for expected changes
in the coming year. Sources for this include: financial reports, existing
contracts, and bills from the past year.
Reserve Account - ANSWER - Funds set aside for the replacement of major components of a community's common property.
Reasons for Maintaining a Reserve Account - ANSWER - 1. Meets legal, fiduciary, and professional requirements. 2. Provides for the planned replacement of major items. 3. Equalizes the contributions of old and new owners. 4. Minimizes the need for special assessments. 5.Enhances the resale value.
Percent Funded - ANSWER - Allows an association to measure the relative size of their replacement reserves compared to a 'fully funded' reserve balance.
- / 4
- | P a g e
pg. 4 Reserve Study - ANSWER - Is a budget planning tool with which the association expects to offset ongoing deterioration and prepare for inevitable future expenses.
Consequences of not having a reserve study - ANSWER - Underfunding, Overfunding, and Board member liability.
Benefits of a reserve study - ANSWER - Fulfilling fiduciary responsibility, meet individual state requirements (for regulated states), compliance with the American Institute of Certified Public Accountants' (AICPA) audit guide for community associations, reduce personal liability from claims of financial mismanagement, save valuable time with prioritized business plan for capital repairs and replacements, effective communication tool to keep owners informed, and can turn up maintenance issues that haven't been budgeted in ongoing operations.
Reserve Specialist - ANSWER - CAI established the designation program to help community managers and board members identify qualified reserve study providers to assist communities in developing their reserve study.
What is the value of having the reserve study conducted by a Reserve Specialist? - ANSWER - Reduced liability exposure, independence, focus, credibility, and accuracy.
Reserve Cash Flow Statement - ANSWER - Shows the amount to be funded and the amount to be expended from the replacement fund over a given period of time.
- / 4